Toxic Leadership in Tech Companies: Navruz Avloni on When Executive Behavior Creates Legal Liability

Silicon Valley has long celebrated leaders who break rules and push boundaries. However, when executives cross legal and ethical lines, the consequences go way beyond internal culture problems. They create serious legal liability that can devastate companies both financially and damage their reputation for years.

"What we see happening in some tech companies is abuse of power, where higher-ups operate under a separate set of rules," says Navruz Avloni, founder of Avloni Law and an employment litigator who's gone toe-to-toe with industry giants. "Some companies go to great lengths to shield their executives, regardless of the harm they've inflicted on victims. In doing so, they not only perpetuate injustice but also expose themselves to significant legal risk."

Avloni, who assisted in litigation proceedings that helped secure a $137 million verdict against Elon Musk's Tesla for racial harassment, sees a troubling pattern. The very leadership traits that tech companies often celebrate, aggressiveness, boundary-pushing, and those infamous "work hard, play hard" culture, foster environments ripe for harassment and discrimination.

The Executive Exception

Let's be honest: tech leaders often benefit from a form of de facto immunity within their companies. This protection becomes especially dangerous during company retreats and off-site events where normal workplace boundaries tend to disappear.

"These events are meant to build trust and cultivate a sense of camaraderie," Avloni explains. "But when executives disregard rules and boundaries simply because they're not physically in the office, it completely undermines the purpose of these events and creates significant legal risks."

The root of the problem? Poor preparation. "Before hosting these events, companies should set clear expectations and designate individuals authorized to intervene when boundaries are crossed," Avloni advises. "Many serious incidents I encounter could have been easily prevented with a brief training session or a simple conversation beforehand."

Sexual Harassment: The Silent Crisis

Among the most troubling issues is sexual harassment, which often goes unreported in tech workplaces. According to EEOC statistics Avloni cites, only 6–13% of workplace harassment victims ever file a formal complaint. Although the study is from 2016, Avloni believes the numbers likely remain unchanged, given ongoing fears of retaliation, mistrust in reporting systems, and concerns about career repercussions.

"The obstacles to reporting are substantial and undeniably real," Avloni says. "Coming forward can jeopardize your position in the company, tarnish your reputation in the industry, and expose you to harmful labels and biases. Many victims end up feeling isolated as they struggle to cope with their trauma."

This perpetuates a vicious cycle in which toxic behavior goes unchecked, festering until it inevitably escalates into a lawsuit.

"When companies lack effective complaint processes, employees lose trust and are reluctant to come forward," she notes. "By the time someone finally takes legal action, it often becomes clear that years of problematic behavior went unchecked when it could have been addressed much sooner."

The Financial Reckoning

"These aren't isolated incidents, they're often symptoms of fundamental leadership failures," Avloni emphasizes. "When executives either engage in misconduct or turn a blind eye to it, the behavior permeates the entire organization, creating a toxic culture where breaking the law becomes normalized."

The damage goes far beyond legal costs. "It impacts everything—workplace culture, productivity, and the well-being of not just the victim but everyone aware of what happened," Avloni notes. "It erodes trust, hurts performance, destroys job satisfaction, and even if those involved are eventually separated, the damage is already done."

Building Better Systems

For tech companies aiming to address these issues head-on, Avloni emphasizes three essential components:

1. Clear accountability at all levels: "Responsible companies create processes that apply uniformly to everyone, including executives. No one should be above the rules, period."
2. Training that deals with real situations: "A brief reminder of expected conduct before company events can prevent serious problems. And rules should be upheld at all company events, regardless of the setting."
3. Make reporting safe and accessible: "Create a complaint process that employees genuinely trust. While employees can approach their supervisors or HR in the office, at events, or in informal settings, it's crucial to clearly designate who they can turn to for support."

The tech industry's risk management hinges on directly addressing toxic leadership. "Companies that allow executives to operate without accountability aren't just courting legal trouble, they're often eroding the core values that sustain their culture," Avloni concludes. "Building compliant workplaces isn't just a legal obligation, it's also smart business."